Kerala AAR: Affordable Residential Apartments Attracts 1.5% GST

The Kerala Authority for Advance Ruling (AAR) held that the residential apartments under the affordable residential apartments category attract 1.5% Goods and Services Tax (GST). This rate applies to apartments having carpet areas of less than or equal to 60 square metres in metropolitan cities or 90 square metres in cities.

M/s Crescent Builders (applicant) approached the AAR to clarify whether a 1.5% GST rate can be applied to the affordable residential apartment when a Residential Real Estate Project (RREP) consists of both affordable and other than affordable residential apartments.

AAR pursued the provisions of the GST Acts, rules and notifications and observed that 

  • All 50 units in the apartment complex have a carpet area of less than 60 square metres.
  • Also, the total sale consideration, including all charges for 30 residential apartments, will be above 45 lakhs. However, the total sale consideration for the remaining 20 residential apartments will be below 45 lakhs.
  • Thus, the lateral 20 residential units in the project would qualify as affordable residential apartments.
  • Notification No.11/2017 CT (Rate), as amended by Notification No. 03/2019 CT (Rate), covers the issue of determining tax liability on the construction services for affordable and other than affordable residential apartments in a project.

Thus, AAR ruled that the applicant is liable to pay 1.5% 1.5% GST on the affordable residential units and 7.5% GST on the other than affordable residential apartments in the same project.

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